Asia Market Quick Take – 21 July, 2026

Asia Market Quick Take – 21 July, 2026 

Key points:  

• Macro: Trump imposes 50% tariffs on Canada. US-Iran enters 10^th day of conflict 
• Equities: Chipmakers rebounded; Alibaba rises after unveiling upgraded flagship AI model 
• FX: USD modestly firmer; AUD outperforms on commodities, NZD supported by hot CPI 
• Commodities: Crude oil settled at one-month highs; gold held around $4,000 
• Fixed income: Gilts led a global bond selloff, with Treasuries sliding across the curve. 

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Disclaimer: Past performance does not indicate future performance.  

 Macro:  

• US strikes on Iran entered a tenth day as Tehran continued retaliatory attacks and traffic through the Strait of Hormuz slumped after ship attacks. Trump warned Iran it would be held responsible for three US service members’ deaths. Iran-backed Houthis declared a maritime embargo on Saudi Arabia, threatening Red Sea energy flows, while mediators floated de-escalation plans, including a possible 10-day ceasefire.
• New Zealand’s annual inflation rose to 4.1% in Q2 2026 from 3.1% in Q1, above forecasts and the RBNZ’s 1–3% target. The main driver was transport, with fuel prices surging, followed by housing and utilities, including higher electricity costs. Quarterly CPI climbed 1.5%, the fastest pace since Q3 2023.
• Canada’s headline inflation eased to 2.8% in June 2026 from 3.2% in May, just below the 2.9% forecast, mainly on slower gasoline price growth and softer food inflation. BoC core measures—median (1.9%) and trimmed-mean (1.8%)—fell to their lowest in over five years. On the month, CPI declined 0.4%, led by a 10.2% drop in gasoline.
• Eurozone construction output rose 1.2% YoY in May 2026, a seven‑month high, driven by a 2.9% jump in specialized construction. Civil engineering growth eased to 3.5%, while building construction fell 6.6%. Output grew notably in Austria, Germany, and Poland. Month‑on‑month, construction rose 0.4%.
• New UK Prime Minister Andy Burnham said he would use any flexibility in the UK’s fiscal rules, unnerving gilt investors and triggering a broad sovereign bond selloff that spread to Treasuries and JGBs.
• The Trump administration imposed a 50% tariff on select Canadian goods, including milk, hockey equipment, beer, and plywood, citing discriminatory treatment of US products. Energy, potash, and critical minerals are exempt. Canadian PM Carney said the move violates USMCA and that Canada is ready to intensify talks. 

Equities:  

• US — The S&P 500 fell 0.2% on Monday to 7,443.28, its third consecutive decline and lowest close since June 29. The Nasdaq 100 was little changed, propped up by a 2.3% rebound in chipmakers (Nvidia, Broadcom) after the sector sank into a bear market last week. Apple was the largest drag, falling 2.1%, while Tesla also weighed. Carvana had the steepest single-stock decline at -4.8%. Alphabet rose on a report that Google is developing a new AI efficiency chip. Market breadth was weak, with only 165 of 503 S&P 500 stocks advancing and the median stock down 0.5%.  
• EU — European equities were pressured on Monday as Middle East tensions drove oil volatility and gilt yields surged following PM Burnham's fiscal comments. UK gilts sold off 5–9 basis points, dragging broader European fixed income and weighing on risk sentiment. The UK 10-year yield premium over US Treasuries widened to a one-month high of 41.5 basis points. Financial stocks underperformed amid the geopolitical backdrop.  
• Asia — Japan's Nikkei rose approximately 1% to 64,793 on Tuesday, returning from a long weekend, with futures having signalled a positive open. However, structural rotation away from semiconductor names poses a cap on upside. The Kospi opened 0.6% higher at 6,553 before swinging lower to -1% at 6,450, reflecting choppy price action; South Korea's early July exports hit a record on AI-driven demand, though Citigroup downgraded Korean equities to neutral. The STI fell 0.2% on Monday to close at approximately 3,890, weighed by a tech rout coinciding with the launch of Moonshot AI's Kimi 3.0 model. In Hong Kong, Alibaba rallied after unveiling upgraded flagship AI model on Monday as the MSCI China Index rose 2.7%, with global banks including Citigroup turning more bullish on Chinese equities. Taiwan's Taiex slipped an additional 0.5% on Monday after posting its worst day since April 2025 on Friday, failing to sustain an early bounce. 

Earnings this week: 

• Tuesday: Alaska Air Group, General Motors, 3M, Schwab, Interactive Brokers 
• Wednesday:  IBM, Tesla, Alphabet, GE Vernova 
• Thursday: American Airlines, Blackstone, Intel 
• Friday: Verizon, American Express 

FX: 

• FX moves were mixed, with the dollar only modestly firmer overall as Middle East tensions and higher US yields lent support, but commodity and some EM currencies outperformed.
• Among G10, EURUSD dipped about 0.1% to 1.1414 on mild dollar strength, while AUDUSD outperformed, rising 0.45% to 0.6998 on oil- and commodity-linked demand.  
• CAD was the clear laggard, weakening 0.38% versus USD, making it the worst G10 performer despite higher oil prices, amid risk-off tone and softer domestic expectations. 
• GBPUSD closed at 1.3431 under pressure after PM Burnham’s comments on fiscal flexibility sparked a gilt selloff and a wider UK–US 10-year yield spread.  
• NZDUSD at 0.5838 was supported by a hotter Q2 CPI print (+4.1% YoY), firming RBNZ hike bets and nudging 2-year yields higher.  
• JPY stayed weak with USDJPY around 162.49 (inverse), as elevated oil import costs continue to weigh on Japan’s terms of trade. 

Commodities: 

• WTI settled near $83 a barrel on Monday — its highest close since mid-June — after swinging in a $5 range. Brent briefly topped $90 before paring gains to trade below $89. The move was driven by the Houthi maritime blockade on Saudi Arabia, the 10th consecutive day of US strikes on Iran, and a tanker strike in the Strait of Hormuz. Oil has steadied in early Asian trade on Tuesday. 
• Bullion continued to trade in a narrow range around $4,000 an ounce, ending Monday's session down 0.2%. Gold is holding above the key psychological level despite a stronger dollar and rising yields, as traders weigh Middle East inflation risks against mediation reports. Gold ETFs saw outflows of 110,310 troy ounces in the last session, with total ETF holdings down 2.7% year-to-date. 
•  Comex silver settled 1.36% higher at $56.80 per troy ounce on Monday, its largest single-day gain since 14 July, marking a second consecutive session of gains. Silver remains down approximately 19% year-to-date and 50% off its 52-week high of $115.08 hit in January 2026. Analysts at Forex.com noted that renewed AI infrastructure investment could provide structural support. 

Fixed income:  

• US Treasury yields rose 4–5 basis points on Monday, with the 10-year yield climbing to 4.59% and the 30-year reaching 5.11%. The selloff was driven by spillover from UK gilts following PM Burnham's fiscal comments, as well as Trump's escalatory Iran threats. The 1-year yield rose 2.3bps to 4.029%. 
• UK gilt yields rose 5–9 basis points after new PM Andy Burnham said he would seek "any flexibility" in the government's fiscal rules on his first day in office, stoking concern about increased borrowing. Long-dated gilt yields hit their highest levels since late May. JGBs are expected to face further pressure on Tuesday, dragged by the gilt selloff and a 40-year JGB auction due this week. 
• The US Treasury sold $92 billion of 3-month bills at 3.73% and $79 billion of 6-month bills at 3.835% on Monday, with both stopping through the when-issued bid. Indirect bidder participation was solid, suggesting flight-to-quality flows remain supportive at the short end despite Fed policy uncertainty. DoubleLine is positioning in shorter-dated government bonds, citing elevated yields as a substitute for Fed tightening. 

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